The US dollar index is testing potential short term resistance around 93.90-94.00 zone, before reversing lower again. The corrective rally A-B-C, which began from 89.20 mark on January 6 might be complete around 94.55 mark.
Also note that the index has tested fibonacci 0.382 retracement of the entire drop between 103.00 and 89.20 levels respectively. Potential remains for a corrective decline towards sub 91.50 levels at least if not lower.
Further, the index has also tested its Elliott Channel resistance as displayed on the daily chart. It is testing the upper channel resistance at the time of writing and could resume lower from here. The November 2020 resistance has also been taken out, which call for a pullback.
If the proposed structure holds well, the US dollar index remains well placed for a corrective drop toward 91.50-92.00 zone in the next few weeks. Alternatively, a push through 94.55 levels will test 95.00 and 96.00 levels before finding resistance again.
Traders might be preparing to initiate fresh short positions around 93.90-94.00 zone, with risk above 94.55 and potential target toward 92.00 and 91.50 levels respectively. Watch out for a break below 93.50 to accelerate further.
Finacademy Technical Team
USDJPY could be progressing into a counter trend rally toward 114.30-50 zone in the next few trading sessions.
Gold dropped to $1770 mark on Tuesday before finding some support. The yellow metal is still testing its intermediate trend line support connecting $1721 and $1758 levels respectively.
The US dollar index carves a meaningful top around 96.88 mark over the last week. The index reversed sharply on Friday confirming a bearish Evening Star candlestick pattern on the daily chart.